Productivity and Business Cycles in Japan: Evidence from Japanese Industry Data

26 Pages Posted: 21 Jun 2006

See all articles by Tsutomu Miyagawa

Tsutomu Miyagawa

Japan Center for Economic Research

Y. Sakuragawa

Atomi University - Faculty of Management

Miho Takizawa

Hitotsubashi University - Faculty of Economics

Abstract

Constructing a database of 37 industries, we examine whether the measured productivity in Japan is pro-cyclical and investigate the sources of this pro-cyclicality by using the production function approach employed by Hall (1990) and Basu and Fernald (1995). The aggregate Solow residual displays pro-cyclicality. A large number of industries show constant returns to scale. No significant evidence for the presence of thick-market externalities is found. Our results also hold when we consider labour hoarding, part-time employment, and the adjustment cost of investment. The results indicate that policies to revitalize the Japanese economy should concentrate on promoting productivity growth.

Suggested Citation

Miyagawa, Tsutomu and Sakuragawa, Y. and Takizawa, Miho, Productivity and Business Cycles in Japan: Evidence from Japanese Industry Data. Japanese Economic Review, Vol. 57, No. 2, pp. 161-186, June 2006, Available at SSRN: https://ssrn.com/abstract=910625 or http://dx.doi.org/10.1111/j.1468-5876.2006.00374.x

Tsutomu Miyagawa (Contact Author)

Japan Center for Economic Research ( email )

2-6-1, Nihonbashi Kayabacho
Chuo-ku, Tokyo 103-0025
Japan

Y. Sakuragawa

Atomi University - Faculty of Management ( email )

1-9-6 Nakano Niiza-shi
Saitama, 352-8501
Japan

Miho Takizawa

Hitotsubashi University - Faculty of Economics ( email )

Tokyo, 186-8601
Japan

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